Press Releases

Court Certifies Groundbreaking “Marriage Penalty” ERISA Class Action Against CITGO

Cohen Milstein

May 16, 2024

Class action certification and recent ruling largely dismissing CITGO’s summary judgment adds fuel to plaintiffs’ claim that CITGO imposed a “marriage penalty” on pension plans’ joint and survivor annuity recipients.

CHICAGO – Today, a federal judge certified a class of more than 1,700 participants and beneficiaries in two of CITGO Petroleum Corporation’s pension plans. This class certification ruling, along with last week’s ruling largely dismissing CITGO’s motion for summary judgement, paves the way for the class claims to move forward to trial. Estimated financial exposure to CITGO could well exceed $30 million.

The lawsuit against CITGO alleges that the Houston-based gas and energy giant violated the federal Employee Retirement Income Security Act (“ERISA”) by failing to properly calculate joint and survivor annuity (“JSA”) benefits for retired employees and imposing a “marriage penalty” that reduced their monthly pension payments.

Specifically, plaintiffs claim that prior to 2018, CITGO’s two pension plans utilized inaccurate mortality tables (from the 1970s) to determine the value of JSAs, resulting in married retirees consistently receiving less than the actuarial equivalent of a single-life annuity (“SLA”) as required under ERISA. The lawsuit seeks to recover the underpayments, and to reform the CITGO Plans to fully comply with protections afforded by ERISA to pension plan participants and their beneficiaries.

We are very pleased the court granted class certification to more than 1,700 CITGO employees and pensioners in this important ERISA case,” said Michelle C. Yau, chair of Cohen Milstein’s Employee Benefits/ERISA practice. “This ruling and the court’s recent order denying summary judgment pave the way for the class claims to move forward to trial and affirm our confidence that our clients will prevail. Married retirees and their beneficiaries deserve to receive accurate pension payments after years of hard work and should not be shortchanged or subjected to a ‘marriage penalty.’”

Just ten days ago, on May 6, the same court rejected CITGO’s motion for summary judgment on three of four counts and partially denied the motion on the fourth count. Specifically, the court rejected CITGO’s arguments that the lawsuit should be dismissed on the basis of the statute of limitations, finding that all three plaintiffs could proceed with their actuarial equivalence claims in Counts 1 through 3, and that two of the three plaintiffs could proceed with their breach of fiduciary duty claim in Count 4. Further, the court rejected CITGO’s argument that the plaintiffs should have exhausted administrative remedies rather than filing suit in federal court, stating that it was “not persuaded that requiring exhaustion would serve any useful purpose in this case.”  Finally, the court also held that plaintiffs’ claims were sufficiently meritorious to proceed to trial and supported by expert testimony.

The case, Urlaub et al v. Citgo Petroleum Corporation et al. (N.D. Ill.), was filed on August 3, 2021 in the United States District Court of the Northern District of Illinois. It was brought on behalf retirees in the CITGO Petroleum Corporation Salaried Employees Pension Plan and the CITGO Petroleum Corporation Hourly Employees Pension Plan who are receiving a joint and survivor annuity.  

This is one of six such “marriage penalty” ERSIA class actions the firm has recently filed against several of the largest companies in the United States, including AT&T, IBM, Intel, Luxottica, and Southern Company.

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About Cohen Milstein Sellers & Toll, PLLC

Cohen Milstein Sellers & Toll PLLC, a premier U.S. plaintiffs’ law firm, with over 100 attorneys across eight offices, champions the causes of real people – workers, consumers, small business owners, investors, and whistleblowers – working to deliver corporate reforms and fair markets for the common good.